Banks are attacked today for not acting sooner to head off the growing financial turmoil which has left millions of home owners fearful for the future.

A report by MPs accuses lenders of ignoring risks in the run-up to last summer’s credit crunch in the hope that the economic good times would simply ‘go on and on’.

Warnings by the Bank of England and the Financial Services Authority that banks and building societies should be more responsible were ignored, the Treasury Select Committee report says.

Lenders took a more cavalier approach to creditworthiness of customers because they often wanted to parcel up loans such as mortgages and sell them on to other investors, the committee adds.

Chairman John McFall said: ‘We must ensure that in the future such warnings are heeded and acted upon by those at the top of financial institutions.’

Northern Rock, the most prominent victim of the global credit crunch, was last month nationalised, exposing taxpayers to a £110billion liability.

The credit crisis is also affecting families, with the Bank of England warning that the number of new mortgages being approved has fallen to the lowest level since records began in 1999.

The number of repossessions in 2007 hit 27,100 – almost double the number two years earlier – and negative equity is a widespread prospect for the first time since the 1990s as the housing market grinds to a halt.

Frances Walker, from debt charity Consumer Credit Counselling Service, said: ‘It’s going to be much more difficult for first-time buyers and those on lower incomes to get a mortgage.’

But the British Bankers’ Association said Northern Rock was a unique case and there was ‘no real evidence’ of other banks lending irresponsibly.